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CVS is a version control system for source code. We don't care whether or not you actually use it to control your site-local modifications. However, even if you don't, it's still important you put your modifications under a directory in $LJHOME/cvs.
What you want to do now is make a directory that holds the ‘local’ files. The LiveJournal tools look for your files in a directory beside livejournal named local, but local can actually be a symlink to your real directory. 
 LiveJournal.com uses the directory name ljcom for its site-local modifications, so the livejournal directory is entirely free of LiveJournal.com-specific code. If you're helping with LiveJournal.com development, you'll want to symlink ljcom to local.